Forecast: US dollar and gold to increase

Baku. 3 July. REPORT.AZ/ Oil prices and gold have settled into a range of late. But oil bears are hoping that rising Opec output and rising US inventories after the peak demand season will allow prices to move lower, while a rate hike in the US could be a buying opportunity for gold, Report informs, says Ole Hansen, Saxo’s Head of Commodity Strategy.

Hansen expects the third quarter will be when the Fed’s chair Janet Yellen begins to turn off the liquidity tap and maintains his call for gold to finish the year at $1,275/oz., somewhat above the current consensus.

The US economy is slowly but steadily getting back on track after the Q1 doldrums and the question is no longer if the Fed will hike rates, but when. The answer to that question depends on who you ask. The market seems to stand on two legs, more or less split between September and December says Mads Koefoed, Saxo Bank’s Head of Macro Strategy.

Koefoed also considers Europe saying the European Central Bank president Mario Draghi also has a handful on his plate in Q3, but it is of a different nature as a Greek euro exit looms large while sovereign bond yields have surged with the German 10-year rising to more than 0.8% from less than 0.2% in Q2. He sees growth in the region staying robust in the second half of 2015 albeit without much pickup.

Saxo Bank’s Head of Fixed Income Trading Simon Fasdal says the recent rise in global bond yields has already established itself as a major theme in financial markets. He also considers what could go wrong this quarter. Besides Greece, there are no real signs of any critical market triggers, and now with the holy trinity for Europe – a lower oil price, a weaker euro and ECB bond-buying – this should boost the economy and send inflation expectations and yields into an upwards spiral in Q3.